No short-term vacation rentals certificates issued while Rev and Tax works on regulations

Neighbors Gabriel Simon, right, and Alfredo Bustamante confront a neighborhood tenant about underground tourism on their in Tamuning street on Jan. 21. The pair suspects at least two underground bed-and-breakfasts are currently operating on their street. "If you don't respect our culture and laws, as a local, then I have a problem," said Bustamante. (Photo: Mark Scott/PDN)

The Department of Revenue and Taxation hasn’t issued any certificates for short-term vacation rentals because the department is still working on rules and regulations, said Director John Camacho.

Public Law 33-165 was signed into law on June 30, 2016. The law prohibits people renting out spaces as short-term vacation rentals without first obtaining a business tax certificate from Rev and Tax.

“We haven’t issued any certificates in terms of this because we haven’t complied with the law yet,” Camacho said.

Under the law, the agency must also adopt rules and regulations for short-term vacation rentals, which are subject to the Administrative Adjudication Act.

Camacho said his department is working with legislative oversight chairman Sen. Joe S. San Agustin, D-Yigo, on getting rules and regulations implemented through a bill. Implementing the rules through a bill is quicker than going through the Administrative Action Law, Camacho said.

A bill for the short-term vacation rental rules hasn’t been drafted yet, according to Sen. San Agustin’s office. The senator is still researching and reviewing information for the bill, according to the senator’s office.

While Rev and Tax hasn’t issued any certificates for short-term vacation rental units yet, Camacho said there are businesses that may have other licenses like a bed-and-breakfast license. Camacho said there are about 18 bed and breakfast licenses issued.

A bed and breakfast is different from a short-term vacation rental in that a it is limited to maximum five rooms to be occupied and the owner-proprietor occupies one of the rooms full-time.

“A B&B means that a homeowner lives in a home and rents out rooms of that home to tourists to stay with the owner,” said Bart Jackson, hotelier and Guam Visitors Bureau board member.

A bed and breakfast must have breakfast available on-site for guests, according to the law.

A short-term vacation rental unit, under the law, is a residential dwelling that doesn’t have to have an on-site manager.

It can be any apartment, any condominium or any home, Jackson said.

A short-term vacation rental unit is an accommodation for transient guests but the guest cannot live there for more than 30 consecutive days. The short-term vacation rental doesn’t have to provide breakfast on-site. The owner of the property doesn’t have to live in a short-term vacation rental.

Websites like Airbnb and Vacation Rental By Owner allow people to list their homes or a spare room for tourists. Airbnb and VRBO are separate companies. Airbnb also offers a smartphone app for users to book rooms or homes, usually as an alternative to booking a hotel room, in the city they are visiting.

Airbnb isn’t limited to bed and breakfast properties. A search of the website showed over 300 available properties all over Guam for visitors. One listing was priced at $28 a night. It offered a queen-sized bed in a home in Dededo, where guests would share a bathroom. Another Airbnb listing advertised a “presidential penthouse condominium” in Tamuning with five bedrooms, four bathrooms that could fit up to 10 people going for $855 a night.

A search of available properties from in Guam on VRBO, yielded 22 results. One user listed a private room in Tumon for $40 a night. Another user put up an entire home available near Tumon to live in for $767 a night.

In fiscal 2017, more than 1.5 million tourists came to Guam, according to GVB.

There are rooms and entire homes listed in Piti, Sinajana and Mangilao on these websites.

Public Law 33-165, passed in 2016, was meant to regulate of the unlicensed lodging industry. At the time Jackson estimated that there were 100 unlicensed bed and breakfast properties for incoming tourists.

"I brought it up two years and I caught a lot of flack in the press and people said I didn't know what I was talking about and I was picking on certain ethnic groups and I was completely wrong," Jackson said. "Well now two years later, I've proven to be not only right but understating the problem."

“Many destinations now are facing these challenges with the rise of alternative accommodations, such as vacation rentals and B&Bs,” said GVB President and CEO Nate Denight. “Websites such as Airbnb and Naver have really made these options more accessible to travelers. The key is to properly regulate so everyone is playing by the same set of rules.”

Operators of short-term vacation rentals are supposed to be paying occupancy taxes and they’re supposed to have business licenses, Jackson said.

Camacho said department hasn’t collected any taxes on short-term vacation rentals. DRT Deputy Director Marie Benito said they are also working with the site Airbnb on an agreement to collect taxes from properties leased through that website.

A few people have come in to Rev and Tax trying to apply for the short-term vacation rental certificate, Camacho said. But Camacho said they tell those people that they aren’t ready and the department can’t issue any certificates because they are still working on trying to adopt the rules and regulations.

Jackson, president of Hotel Santa Fe, said illegal short-term vacation rentals is a frustrating issue for himself and others who abide by the law.

“Part of the challenge is it takes a lot of effort and maybe staffing to get this stuff right,” Jackson said.

Benito said the department is hiring four more compliance officers to get on the streets and inspect places to ensure they are operating with proper licenses. Benito said they hope to fill the compliance officer positions by February.

GVB sent a letter in August to Rev and Tax, asking to establish an outreach program for short-term vacation rentals and bed and breakfast businesses. Jackson said the bureau is working with Rev and Tax and hoping to launch the outreach program sometime this year.

“We can do a series of information sessions in the community so that everybody knows what’s required,” Jackson said. “We’re not trying to eliminate this section of the industry. People who want to come and want to stay in someone’s home or want to stay in an apartment are welcome to do so. It’s just a question of regulation.”

Benito urged anyone with information on homes that may be leased to tourists to call the business license branch at 635-1829.

“We appreciate these calls because some of these businesses that are run out of homes don’t always advertise. We want to make sure they follow the regulatory and tax laws of Guam,” Benito said.